LyrArc Article Gist
THe Economist says that the efforts of banks like Chase JP Morgan, Goldman Sachs and Wells Fargo to rewrite history are wrong and dangerous. They are wrong because there was acomplete collapse of confidence by December 2009 and these banks benfitted from state guarantees and government efforts to help the banks without which Goldman, and Morgan Stanley and other banks would be in serious difficulty or in danger of collapsing. It is dangerous because it is being used to distort the process of putting in place the right compensation incentives to avoid overleveraging and risk taking, putting in place prudent regulation, and taking all the right steps to prevent a future banking crisis, with the argument that this should apply only to the weaker banks. It is dangerous on two other points. The banking regulations should apply to the entire banking industry, and especially on banks that are too big to fail. These banks now are content to leave the toxic assets on their books where they are and consider government efforts to purchase these toxic loans and securoities or otherwise resolve these assets in some kind of good bank-bad bank scheme, as unnecessary. All this is happening even as the banks themselves remain poorly capitalized, even after raising funds in the capital markets recently, and remain very dependent on the government. The danger is that this may make everyone complacent in the event of a developing new storm....

LyrArc Article Gist
Fiat's 35% stake in Chrysler was obtained not for a cash investment, but mainly in exchange for covering the cost of retooling a Chrysler plant to produce one or more Fiat models to be sold in the US. Fiat would also provide engine and transmission technology to help Chrysler introduce new fuel efficient small cars. This purchase would see the Cerberus 80.1% stake in Chrysler diluted. It would not affect the 19.9% of Chrysler that is owned by Daimler. As part of the Fiat deal Chrysler is supposed to restructure the $9 billion in debt it has on its books. Cerberus may lose billions on the deal, but it faces an even bigger hit if it is forced into Chapter 11 bankruptcy protection or it continues running Chrysler into an even deeper slump in auto sales in 2009. The Fiat deal is the only thing that Chrysler has to show that it should keep the government loan of $4 billion and get additional funds if needed to keep the company runnning. Chrysler did not show any new models at the North American Auto Show in Detroit recently and has practically ceased product development. For Cerberus this is the exit plan and ends any prospect of making the Chrysler deal work. Cerberus acquired Chrysler by mortgaging all of Chryslers plants and assets for a $12 billion loan from a group of banks, JP Morgan, Goldman Sachs, and Citigroup. ...

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Mr Iksil, a trader in Chase's CIO London office made such massive bullish bets on CDX-IG-9 index of 121 companies by selling credit default swaps, to the point where it cost less for protection on the index than for the individual components of the index. This worked in Jan-Feb 2012 with hedge funds on the other side having paper losses. In subsequent months hedge funds realized that Iksil would have to unwind some of these bets to avoid large losses. As a trader at Bank of America put it in a memo, at that point "Fast money smelled blood." The result is that hedge funds accelerated their bets against Mr Iksil's bullish positions, leading to the large $2 billion losses at CIO unit of Chase- losses on depositors money from aggressive bets in a volatile market. Mr Iksil is a French born trader, who has worked for Chase since March 2007. He has earned $100 million each year for Chase. He travels to London from his Paris home each week, and works from home Fridays. Two junior traders work with Iksil, primarily placing bets for complex trades in credit markets....

LyrArc Article Gist
Prime Minister Fukuda of Japan and a hot new Japanese drama TV show "Change", that centers on a 35 year old prime minister Keita Asakura. It starts with dawn rising over the Japanese prime minister's building and in one of the episodes shows people talking excitedly about Obama 46 years, and Cameron, 41 years, politicians in the USA and Britain with comparisons to older political leaders like prime Minister Fukuda of Japan. In fairness to Fukuda, 72 years old, he has improved relations with China and hosted the Chinese President in Tokyo, but he has failed to get legislation through parliament because of the opposition parties the DJP which is also unpopular. But with the TV show having 20% of viewers in the Tokyo area including the current defence minister Ishiba, 51 years old, and the youngest cabinet minister, it shows that status quo is quite unpopular in Japan and the current politicians are quite unpopular.